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    Divgi Torq

    DIVGIITTS
    Automobile and Auto Components·13 Nov 2025
    Management Summary

    Divgi Torq delivered a strong Q2 and H1 FY26, achieving record quarterly total income and robust profit growth driven by healthy volumes in transfer cases and exceptional performance in components exports. A significant milestone was achieved with a nomination from a leading Japanese OEM for a global transfer case platform. While the EV transmission segment remained subdued, management expects a meaningful ramp-up in H2 FY26. The company continues to focus on organic growth and strategic technology acquisition, with a cautious approach to M&A.

    Highlights

    6
    • Q2 FY26 Total Income reached a highest ever of INR88.3 crores, marking a 49% year-on-year growth and 15% sequential growth.

    • H1 FY26 Total Income grew by a strong 39% year-on-year to INR165.1 crores.

    • H1 FY26 EBITDA increased by 35% year-on-year to INR41 crores, maintaining a healthy margin of 24.9%.

    • H1 FY26 PAT grew by an impressive 43% year-on-year to INR19.7 crores, with a PAT margin of 11.9%.

    • Exports contributed significantly, reaching over 20% of total income in Q2 FY26, progressing towards the medium-term target of 20-25%.

    • Secured a strategic nomination from a leading Japanese OEM to develop a transfer case for an iconic pickup truck platform, with SOP starting H1 FY28.

    Concerns

    2
    • EV transmission segment performance remained muted, declining by 5% in H1 FY26, with subdued EV volumes in the market.

    • Working capital cycle increased due to DDP (destination duty paid) export contracts requiring higher inventory for long sea routes and market volatility.

    What Changed2

    vs Q3 FY26

    Guidance items10 → 5 (-5)Q&A highlights8 → 6 (-2)
    Key financials

    Metrics

    13

    Periods

    2

    Q2 FY26

    6
    • Total Income
      ₹88.3 Cr
      YoY+49%QoQ+15%
    • EBITDA
      ₹22 Cr
      YoY+33%QoQ+15%
    • EBITDA Margin
      24.9%
    • PAT
      ₹10.7 Cr
      YoY+37%QoQ+20%
    • PAT Margin
      12.2%

    H1 FY26

    7
    • Total Income
      ₹165.1 Cr
      YoY+39%
    • EBITDA
      ₹41 Cr
      YoY+35%
    • EBITDA Margin
      24.9%
    • PAT
      ₹19.7 Cr
      YoY+43%
    • PAT Margin
      11.9%

    Segment breakdown

    Transfer Case Segment
    42% Growth (H1 FY26)
    EV Transmission Segment
    -5% Growth (H1 FY26)
    Components Segment
    113.0% Growth (H1 FY26)
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Market Share
    Exports Contribution to Total Income
    20% to 25%
    High
    Volume
    EV Transmission Volumes
    20% to 25% improvement
    High
    Volume
    Uptick in Export Contracts
    30% to 40% uptick
    Medium
    Volume
    Tata Motors Portfolio Volumes
    at least a 20% to 30% improvement
    High
    Strategic Initiative
    US Manufacturing Footprint Study Conclusion
    conclusion before March end '26
    High

    EV Transmission Volume Growth

    H2 FY26
    Current-5% YoY in H1 FY26
    Target20-25% improvement in H2 FY26

    Why it matters

    EV segment growth is crucial for future revenue diversification and market positioning.

    Broadly, we are expecting about a 20% to 25% improvement in volumes on EV transmissions.

    How to verify

    key_financials.segment_breakdown[name='EV Transmission Segment'].metrics[label='Growth (H1 FY26)']

    Risks & concerns

    4
    RiskSeverity

    Muted EV transmission segment performance

    EV volumes in the market were subdued, leading to a 5% decline in the EV transmission segment in H1 FY26. Management expects a ramp-up in H2 FY26 with new platform supplies.Management acknowledged

    medium

    Increased working capital cycle

    The working capital cycle has increased due to DDP export contracts requiring higher inventory levels to manage long sea routes and market volatility.Analyst acknowledged

    medium

    Global market uncertainties and US tariff actions

    Despite global uncertainties and US tariff actions, management believes India remains competitive for light-duty applications in the US, and does not foresee significant disruptions.Management downplayed

    low

    Unpredictable marketplace

    The marketplace continues to remain a little unpredictable, requiring the company to strengthen the resilience of its business model.Management acknowledged

    low

    Q&A highlights

    6

    “The platform that we are working on is a global platform, okay! And it is a market leader right now in Thailand and ASEAN. The global volumes of this platform and the models that the OEM makes using this platform exceed 1 million. So from a strategic standpoint, this is a big deal for us.”

    Clarifies the strategic importance of the new OEM win, its global nature, and the company's proprietary technology advantage (weight reduction from 45kg to 32kg) that secured the deal.

    asked by Mahesh Bendre

    3 min read6 chapters

    Detailed Narrative

    01

    Q2 & H1 FY26 Financial Performance Overview

    Divgi Torq reported its highest ever quarterly total income of INR88.3 crores in Q2 FY26, representing a 49% year-on-year growth and 15% sequential growth. For H1 FY26, total income stood at INR165.1 crores, a 39% increase from H1 FY25. EBITDA for H1 FY26 was INR41 crores, up 35% YoY, with a healthy margin of 24.9%. PAT for H1 FY26 reached INR19.7 crores, growing 43% YoY, resulting in a PAT margin of 11.9%. Gross margins remained strong at 63% in H1 FY26, expanding by 119 basis points.

    02

    Strategic Win: Japanese OEM Nomination

    The company secured a significant nomination from a leading Japanese OEM, a global market leader, to develop a transfer case for their iconic pickup truck platform. This win is highly strategic due to the OEM's global presence and the platform's scale, with over 1 million units. Divgi Torq's proprietary technology, which reduced the transfer case weight from 45kg to 32kg while preserving electronic circuitry, was a key differentiator. Initial application will be in India, but the platform's global nature opens doors for future international expansion.

    03

    Segmental Performance: Transfer Cases, EV Transmissions, and Components

    The transfer case segment delivered strong growth of 42% year-on-year in H1 FY26, driven by sustained volume offtake from anchor customers like Mahindra, Tata, and Force Motors. The components segment showed robust performance, growing 113% YoY in H1 FY26, primarily export-led. Exports contributed nearly 16% to total income in H1 and over 20% in Q2 FY26. In contrast, the EV transmission segment declined by 5% in H1 FY26 due to subdued market volumes, though a 20-25% improvement is expected in H2 FY26 with the new Sigma platform for Tata.

    04

    Export Strategy and Working Capital

    Divgi Torq's export business is gaining momentum, with current revenue streams mainly from the United States and Mexico, and a new program for Audi in Portugal ramping up for production in calendar '26. The company is also in talks with customers in Korea, Thailand, and China. The increase in working capital is attributed to DDP (destination duty paid) export contracts, which necessitate maintaining higher inventory levels to manage long sea routes and market volatility🌐. Management views this as a necessary cost for higher export margins.

    05

    Next-Gen Transmissions and Technology Focus

    The company is focusing on 8-speed dual-clutch automatic transmissions for the passenger segment in India, skipping 6/7-speed options. Drive trials are underway with OEMs to demonstrate superior performance and fuel economy. For commercial trucks, Divgi Torq is investigating rear-wheel drive automatic transmissions. A significant RFQ for a five-speed manual transmission from a major Indian CV OEM is also under evaluation. The company emphasizes its engineering depth and ability to provide integrated high-value solutions globally.

    06

    Capital Allocation and Growth Outlook

    Divgi Torq's preferred approach for growth is organic, with a focus on aggressively acquiring technology rather than large-scale M&A, citing the challenges of integrating cultures and maintaining quality. The company is evaluating establishing a manufacturing footprint in the U.S. market, with a conclusion expected by March end '26. Management anticipates a 20-30% volume improvement from broadening its portfolio with Tata Motors and a potential 30-40% uptick in some export contracts from August '26.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.